'Trusts are very much under attack right now': Katten partner Joshua Rubenstein on the challenges impacting the private client market
Private Client guide editor Joshua Rubenstein discusses the tax and regulatory issues that are impacting high net worth individuals
Joshua Rubenstein, a partner at Katten Muchin Rosenman, talks about the trends that are impacting the private client world and the legal issues high net worth individuals are likely to face over the next 12 months, as part of a series of interviews with the authors and editors of Global Legal Post’s Law Over Borders comparative guides. Rubenstein is the editor of the Private Client guide.
What are the key trends impacting private clients at the moment?
“Constant change, the unpredictable nature of that change and constant controversy. Change used to be cyclical – you would go through periods of change and then periods of stability. But since 2008 and the global economic collapse, change has just not stopped. So it’s very hard for private wealth professionals to tell people what the answer is when you don’t know. You can tell people, however, what the answer ought to be, and that may be the best you can do, at least for the time being. So change is nonstop as opposed to episodic, and things change in ways you never would have thought. And with all this change comes controversy. People are fighting with each other like never before – they want to blame somebody, whether it’s the trustee or their lawyers or their siblings. It’s very important therefore when you are giving advice in the private wealth space to assume that your advice and work product will be challenged, so keep notes and record why you made decisions. Then if a client challenges something, you’re prepared for it.”
What regulatory changes are on the horizon that might target private wealth?
“There are two areas – one is a big tax regulatory issue and the other is a big non-tax regulatory issue. The tax issue is that governments are still broke, and it’s easy to vilify the people who ended up with all the money after all this period of change. Einstein always said that matter never disappears, it just rearranges itself – and money is pretty much the same. Money is now more in the hands of a microscopic few, and the disparity between the ultra wealthy and everybody else has never been as large as it is at the moment. As a result, the world’s ultra wealthy are tax targets and countries are looking to impose wealth taxes. On the non-tax side, the envelope has been pushed too much for trusts and all the bells and whistles make trusts look illicit. Regulators don’t see the 999 times out of a 1000 that trusts are used for perfectly defensible purposes. What comes to their attention is the one time in a thousand that someone has used a trust to get away with something. So trusts are very much under attack right now and you’re seeing calls for trusts to be public and not private.”
What are private clients most concerned about right now and how is that likely to change over the coming year?
“They’re worried about how to protect their wealth and their family from attack – whether it’s a fiscal attack or a legal attack – and that isn’t likely to shift over the next 12 months. So structures need to be more flexible than ever. If you put in very restrictive terms, you can’t adapt to circumstances. So you have to give someone the ability to make changes to address things that you can’t foresee or predict. That’s a very psychologically difficult thing for wealth creators to do. But the premium is on flexibility now and you have to build in some mechanism to make changes.”
The GLP Law Over Borders Private Client guide features contributions from leading law firms across the world including: Arendt & Medernach, Aronson, Ronkin-Noor, Eyal Law Firm and Notary, Bär & Karrer, Chiomenti, Conyers Dill & Pearman, Cuatrecasas, Gasser Partner Rechtsanwälte, Humberto Sanches e Associados, Katten Muchin Rosenman, Mishcon de Reya, Ogier, Poellath, RBC Wealth Management, Robinson Sheppard Shapiro, Tokyo Heritage Law Firm, Turcan Connell and UGGC Avocats. Click here to read the guide online.
Get to know Joshua…
If you had the freedom to live anywhere in the world, where would you choose?
“I might sound like a dyed-in-the-wool New Yorker, but I travel 60% of the time and I cannot think of any place I would prefer to live other than where I live, which is New York. However, two places I could see myself living other than New York are London and Zurich. Both are amazing cities, with broad culture – you can do just about anything there.”
What is the best piece of career advice that you have ever received?
“I’m not sure if I received it or figured it out – maybe a combination of the two – but it is to listen as much as possible before you speak. When lawyers go to law school, they take courses in oratory and they take courses in trying to convince people. But nobody gives you a course in listening. And your oratory may fall on deaf ears if you haven’t won your audience over. In the private client space where things are so psychologically driven, people aren’t necessarily making economic decisions, they’re making emotional decisions. And sometimes what they want to do is counter economic. You can’t give anyone advice until they feel heard. I try very hard just to hear people out, because once you’ve heard everything they have to say, only then can you say ‘that’s really interesting, but have you considered this?’. Then it’s possible for them to say, ‘Ah, I didn’t think of that’. But you’re not able to have that conversation with somebody if you haven’t heard them out.”
If you weren’t practising law, what would you be doing?
“I would have been a musician. I play several instruments, but the two instruments I am best at are piano and guitar. I sometimes incorporate them in professional conferences around the world, where for some of them we have a tradition late in the evening of going to the bar and convincing the hotel person playing the piano to go home early. And then I’ll sit down, people call out songs and I play them. And then at other conferences, it’s become traditional for me to bring my guitar and play.”
For further information about the Law Over Borders comparative guides email associate publisher firstname.lastname@example.org.
Email your news and story ideas to: email@example.com